Online marketplaces and retailers such as Amazon (NASDAQ:AMZN) are an ongoing threat to traditional brick-and-mortar supermarkets. These "basket bandits" capture some of the supermarket business, creating a loss of sales, according to a recent report from Brick Meets Click.
Although these sites are not direct competitors to grocers, they capture 84 percent of online grocery trips and account for 59 percent of all online grocery spending.
According to the report, "The Supermarket Guide to Online Grocery Competition," other online retailers taking away supermarket sales include Blue Apron, ThriveMarket.com, Drugstore.com and Chewy.com, reported Supermarket News.
"Consumers have been spreading their online grocery shopping across more sites, and the increased availability of options is dramatically accelerating this trend," Bill Bishop, chief architect of Brick Meets Click and the primary author of the report, told Supermarket News.
On the flip side, multichannel supermarkets only account for 10 percent of all online grocery trips and competitors such as Peapod and FreshDirect capture 6 percent of all online trips.
Amazon is responsible for a large portion of the "basket bandit" trips, capturing 48 percent of all online grocery trips. In just three years, the percentage of shoppers who have bought groceries from Amazon in the past 30 days has increased 25 percent.
"We also found an Amazon multiplier effect," Bishop told Supermarket News. "As online grocery trips per month increase, so does Amazon's share of trips. They are continually working on making buying easier, and supermarkets need to respond."
In total, multichannel supermarkets capture about one-third of all dollars spent online on groceries. However, multichannel supermarkets outperformed Amazon in only one area of online experience – adding coupon discounts. The report suggests that these digital supermarkets can compete and avoid "sales leakage" if they establish a strong presence in local markets, and when they commit to improving product information; improving order completion; and giving better notification of substitution for online orders.
Now is the time for supermarkets to join the online competition, as the rate of online grocery shopping doubled in 2015.
- see this Supermarket News article
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